Effects of the Integration of “Energy-Climate-Natural Resources” Determinants in the Country Risk Methodology
The Beyond Ratings country risk proprietary methodology is based on five pillars of analysis, of which the Energy-Climate-Natural Resources (ECR) pillar is the main innovation in comparison with conventional methodologies. The comparative analysis of risk scores, excluding and including the Energy-Climate-Natural Resources determinants, reveals that they provide distinct complementary information to the determinants of the other pillars.
Over the period 1999-2016, the analysis by subgroups of countries of comparable levels of income (according to thresholds set by the World Bank) and covering different and contrasted situations (in particular net energy exporters and importers) shows that the integration of the Energy-Climate-Natural Resources determinants translates into an improvement in the median risk score of middle- and low-income countries and a slight deterioration of the median score of high-income countries.
The integration of Energy-Climate-Natural Resources determinants, in the general context of rising country risk and increasingly ambitious climate policies, contributes to revealing contrasted underlying situations, the characterization of which is not limited to simply taking into account exogenous factors such as natural resources endowment.